Cenvat credit on duty-paid invoices cannot be denied by reopening the supplier's assessment at the recipient's end.

Cenvat credit on inputs received under duty-paid invoices cannot be denied to the recipient manufacturer merely because the supplier's activity is later alleged not to amount to manufacture or the duty paid at the supplier's end is questioned. Rule 7(2) required the recipient to take reasonable steps to verify the supplier's identity and address, but did not permit officers at the recipient's end to reopen the assessment made at the supplier's end. Where duty has been collected by the department and the inputs are received under duty-paid invoices, the credit may be availed as reflected in those invoices; the dispute was also treated as revenue neutral.

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Issues: Whether Cenvat credit could be denied to the recipient manufacturer on the ground that the supplier's activity was not manufacture and the duty paid by the supplier was allegedly not excise duty.

Analysis: The respondents received the inputs on invoices showing duty payment and used the credit for payment of duty on their final products. Rule 7(2) required the recipient to take reasonable steps regarding the identity and address of the supplier, and did not permit the recipient's jurisdictional officers to reopen or question the assessment made at the supplier's end. Once duty had been collected by the department and the inputs were received under duty-paid invoices, the recipient could avail the credit as reflected in those invoices. The dispute was also revenue neutral.

Conclusion: Cenvat credit was rightly allowed to the respondents and the Revenue's challenge failed.

Final Conclusion: The order allowing credit was sustained and the Revenue appeal was rejected.

Ratio Decidendi: A recipient manufacturer is entitled to take Cenvat credit on inputs received under duty-paid invoices, and the departmental authorities at the recipient's end cannot deny such credit by re-opening the assessment made at the supplier's end.

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